The Opaque Champions

China's once dilapidated state-owned enterprises (SOEs) have grown into powerful giants. After three decades of reform, China's SOEs now comprise over 60 percent of the largest 500 companies in China and more than 15 percent of Fortune Global 500 companies in the world. Pervasive state ownership continues with no sign of vanishing as a salient feature of Chinese corporate governance. Despite their economic importance, the SOEs' organizational structure and governance remain obscure to outsiders. The obscurity is attributable partly to the secretive culture of the Chinese government but also more importantly to the way scholars have approached this topic. Scholars of Chinese corporate governance have focused on listed firms, but China's listed SOEs are embedded in business groups which have extended ties with various corporate and non-corporate entities. To fully understand the governance and behavior of China's SOEs, it entails an approach that looks beyond the listed firms and considers the complex organizational relations surrounding the SOEs. This dissertation shows that China's large industrial SOEs are organized as vertically integrated corporate groups under the government ownership agency (SASAC) with strategic linkages to other business groups as well as to various governmental organs. The vertical ownership structure helps power centralization and masks many actual governance practices from the public eye. There are many hidden institutionalized connections to various state/party organs that play a more influential role than visible shareholding ties. The SOEs also have constructed intergroup strategic ties that facilitate cross-group collaboration to achieve their globalization ambition. Furthermore, the making of the managerial elite presents a high degree of cohesion and closure, which strengthens the relations across SOEs themselves and with other government organs. The party-state uses such various connections to embed SOEs in a control network that facilitates resource collaboration across multiple spheres of the state system and maintains the economic foundation of the Party's ruling. The anatomy of the relations surrounding China's large SOEs provides contextualized explanations for the malfunction of many governance institutions such as the board of directors, independent directors and executive compensation The density of the state's control network also suggests the limitation of reforming SOE governance through partial privatization and internationalization.